Board of Pensions goes back to the healthcare drawing board

Blistered by criticism and given some breathing room by far better than expected Medical Plan experience in 2012, the Presbyterian Church (U.S.A.)’s Board of Pensions (BOP) has stepped back from a controversial proposal for funding family medical coverage that would have cost employers and/or church workers nearly $6,000 annually.

That plan, commonly called “DuesPlus,” would have set Medical Plan dues ― currently 21% of “effective salary” for members and dependents ― at 19% for members only and set a flat rate premium of $5,700 annually for family coverage. The proposal suggested that the additional premium could be paid entirely by the employing organization or passed on, all or in part, to the church employee.

“DuesPlus” was advanced last fall when the board was faced with a projected Medical Plan deficit of $28 million by 2014. That much red ink would have required a hike in traditional Medical Plan dues to 25 percent.

“We said then,” said BOP Healthcare Committee Chair John Hamm, “’there will be blood.’ We just didn’t know it was going to be ours.’”

The critical response to the “DuesPlus” proposal was immediate and overwhelming. Hamm described the time since the proposal was made public last October as “incredibly stressful.”

Presbyterians throughout the church claimed that the proposal violated the BOP’s longstanding commitment to “community nature” (in which larger wealthier employers in effect subsidize medical coverage for smaller relatively poorer employers) and “call neutrality” (in which the relative cost of medical and pension benefits are not a factor when congregations seek a pastor or other church worker.)

Others objected that the proposal discriminated against younger church workers with families and against smaller, less well-to-do congregations, which would be less likely to afford the premium and therefore would be more likely to pass the cost on to their pastor, or reduce the pastor’s salary in order to cover the family medical premium.

“The most heart-tugging letters we received,” said Hamm, “were from members who said, “Here’s what it does to me…’”

The board was able to step back from the “DuesPlus” proposal, Hamm said, “because our 2012 experience was way better than projections ― there was a huge dip in claims for the year.” The 2014 Medical Plan deficit he said is now projected to be $14 million, half the original estimate. “That experience,” Hamm added, “lets us spread the pain over two years rather than one,” though he noted current projections show a $42 million deficit in 2015.

“The sense of the [healthcare] committee is we went too far [with the “DuesPlus” proposal],” Hamm told the board, “that there should be a way to moderate what we propose. We listened, we understood the concerns. What do we do about it?”

At its lengthiest meeting in memory, the Healthcare Committee developed three alternative proposals “and we’re going back into listening mode to see what the church prefers,” Hamm said.

The three options currently on the table:

Maintain the current traditional dues structure ― which includes plan members and their families ― and increase those dues from the current 21 percent to 23 percent of effective salary in 2014 and to 24.3 percent in 2015. Conventional wisdom among BOP members is that 25 percent is about as high as Medical Plan dues can go before a “tipping point” is reached at which an accelerating number of churches simply would not be able to afford a full-time pastor.

A modified “DuesPlus” plan, but with higher “base dues” for members and a lower flat-rate premium for partner and dependent coverage. Employers would still have the “flexibility” to pay the premiums or pass on all or part of them to the plan member. If “base dues” were 19 percent, the flat rate would be $2,900 for member and family in 2014; that premium would have to rise by 83% in 2015 in order to keep “base dues” at 19 percent. If “base dues” were 21 percent, the flat-rate premium for family coverage would drop to $1,165 for 2014 only.

Mandatory dues would be 21 percent for “member-only” coverage, with no partner or dependent coverage. Mandatory dues would be 23 percent for members who need coverage for their partners or children through the Board of Pensions medical plan. In 2015, the mandatory dues would increase to 22 percent for members-only coverage, and to 25 percent for members needing coverage for partners or children. The additional dues for family coverage could be paid by the employing organization or “passed through” in full or in part to the plan member. The cost of the 2 percent difference in dues for member-only and member plus family is expected to be about $840 at the proposed minimum effective salary of $42,000 in 2014 and $2,540 at the promised maximum effective salary of $127,000. That’s the amount that either the employer or the plan member or some combination of the two would have to come up with for coverage for a spouse or children.

Between now and its June 27-29 meeting, the BOP will be back in listening mode. Formal opportunities for feedback and other suggestions will occur at the board’s annual Regional Benefits Consultations (RBCs). RBCs are scheduled this year April 17-18 in Philadelphia and April 24-25 in Arlington, Texas, near Dallas.

“To facilitate an open dialogue with members and other plan constituents on the dues options, the Board will soon launch a website dedicated to healthcare topics, including the medical dues options under consideration,” the board announced in its Board Bulletin following the meeting. “The new website will offer a way for plan constituents to ask questions or provide comments as the Board works through this time of potential change. The Board will also seek more informal ways to enter into conversations with plan constituents.”

Said Patricia Haines, senior vice-president for benefits: “We are committed to finding ways to solicit and process feedback from throughout the church.”

In other business, the board:

Paused to remember two architects of its benefits plan who recently died: Dan McGill of Philadelphia and J.T. Simmons of Jackson, Miss.;

Heard a report from its search committee for a new president/CEO to succeed Robert W. Maggs Jr., who will retire after the 2014 General Assembly;

Re-elected its current officers: Chair Tom Paisley, First Vice-Chair John Hamm, and Second Vice-Chair Judith Harris.

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I'm grateful for the BOP's willingness to continue listening and working on this very difficult issue. Let's pray for these folks who have such a challenging ministry with our current economy and with rising health care costs.